Tuesday 9 June 2009

Getting rid of TARP...

Financial Times reported today that the US Treasury has announced that it would allow 10 banks to repay government aid because they raised sufficient capital.

The Treasury will recoup $68bn, much more than it had originally expected, if the banks choose to return the full amounts that they received. The swift return of the funds is a sign that some stability has returned to a sector that was stricken last year and could restore confidence in US banks.
“These repayments are an encouraging sign of financial repair, but we still have work to do,” said Tim Geithner, US Treasury secretary, said in a statement.
The Treasury did not reveal the names of the banks that are now eligible to begin the first wave of repayment. But people familiar with the matter said that the nine banks, all of which passed last month’s government stress tests, included JPMorgan, American Express andGoldman Sachs, plus Morgan Stanley, which had a capital shortfall. Northern Trust, BB&T, State Street, US Bancorp and Capital One Financial will also make repayments, according to people familiar with the matter. Morgan Stanley said it would be repaying its $10bn with “an attractive return for taxpayers.”

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